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. Last Updated: 07/27/2016

Top Income Tax Slashed

The State Duma, the lower house of parliament, in final readings Friday cut the top income tax rate to 30 percent and amended value-added tax legislation.

The Duma voted to write into VAT legislation a list of products with a reduced VAT of 10 percent instead of the usual 20 percent, effectively depriving the government of its current right to change the list.

The list includes basic foods and medicines, baby products and a number of services, including some insurance and bank operations.

Lawmakers changed the tax scale and lowered the maximum tax rate to 30 percent from 45 percent, effective Jan. 1, 2000.

The 30 percent rate applies to annual incomes higher than 150,000 rubles ($5,700). Incomes of up to 50,000 rubles have a 12 percent tax and those between 50,001 rubles and 150,000 rubles have a 20 percent tax.

Tax-dodging is widespread, and the government hopes that the reduction will encourage more people to pay taxes.

The bills still require approval by the president and the upper house, or Federation Council, to become law.